POUGHKEEPSIE, N.Y. -- CH Energy Group, the parent company of Central Hudson Gas & Electric. Corp., said on Tuesday that it expects to be bought for $1.5 billion by Fortis Inc., Canada's largest electricity and gas distribution company.

The proposed buyout, subject to shareholder and regulatory approval and likely to take a year or more, calls for Fortis to buy CH Energy Group's stock at $65 per share -- about 10.5 percent above its trading value as of last Friday -- and assume $500 million in CH Energy debt.

CH shares surged on the news, closing on Tuesday at $66.22, a gain of $7.45, or 12.7 percent.

CH Energy Group, whose Central Hudson unit has about 300,000 electric customers and 75,000 natural gas customers in eight Mid-Hudson Valley counties, said if the deal with Fortis goes through, Central Hudson will remain a stand-alone utility; its headquarters will remain in Poughkeepsie; and its civic presence in the region will continue.

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Fortis, based in Newfoundland, reports having about 2 million gas customers in five Canadian provinces, two Caribbean countries and upstate New York. The company also owns hotels and commercial real estate in Canada.

Fortis Vice President Barry Perry said during a Tuesday afternoon press conference that he has no concerns about how CH Energy's American customers will react to the prospect of foreign ownership.

"We're the neighbors to the north, and we're a pretty friendly bunch, so we're hopeful that we'll get a good reception," Perry said.

Steven Lant, CH Energy Group's chairman and chief executive officer, said at the press conference that Fortis and CH Energy mirror each other financially, and he downplayed the $500 million debt accumulated by Central Hudson.

"The way our balance sheet is structured is very similar to theirs, proportionately; we're both financially strong, with AA credit rating," he said.

Earlier Tuesday, in a prepared statement, Lant said: "We are extremely pleased to deliver compelling value to our shareholders and to become the first U.S.-based member of the Fortis federation of utility companies."

Lant said in the statement that the deal with Fortis could offset or defer future rate increases and enhance the quality of service to customers and that Central Hudson customers will benefit "through adoption of Fortis best practices and enhanced access to capital to fund investments that will improve service and access to technology."

Also, he said, "our employees will benefit from enhanced opportunities in a larger, financially strong parent company that is committed to maintaining existing wages and benefits."

Under the proposed acquisition, CH Energy stated, Fortis would commit to "providing employment security and to continuing existing wage and benefit plans for a two-year period after closing and to honoring our union contracts."

Further, CH Energy stated, "Fortis has expressed a strong desire to keep all of CH Energy Group's employees and to maintain existing wages and benefits."

The utility also said "Fortis has committed to support CH Energy Group's tradition of corporate citizenship and charitable contributions in our community."

"Very little change is expected" in operation from the proposed acquisition, CH Energy stated. The Fortis business model typically focuses on its role in providing equity investment for expansion, but leaves operation of each of its utilities to the local level.

H. Stanley Marshall, president and chief executive officer of Fortis, said in a prepared statement that the proposed purchase "represents ... a strong first step (by Fortis) in the regulated U.S. electric utility marketplace."

The proposed purchase comes seven months after Fortis was outbid by another Canadian firm, Gaz Metro, to buy Central Vermont Public Service Corp. On May 30, 2011, Fortis sought to pay $35.10 a share for 45 percent of the company, but Gaz countered in July with a $35.25 offer that was accepted by shareholders and regulators.

Perry said at the press conference that Fortis has been looking for opportunities to expand in a sector that doesn't see a lot of acquisitions.

"Very few transactions actually occur in this sector," Perry said. "If you look at the entire United States, probably only two or three a year occur. We (were looking at) a number of opportunities even when we were looking at Vermont. It was probably a month or two after the Vermont deal" fell through, that Fortis began talking to CH Energy.

"We've been looking for opportunities in the U.S. probably for four or five years at this time," Perry said.

FORTIS' purchase of CH Energy Group is subject to numerous approvals and the expiration or termination of the Hart-Scott-Rodino Antitrust Improvement Act of 1976.

Lant said the plan is expected to be submitted to the U.S. Securities and Exchange Commission in May, CH Energy shareholders in July, the Federal Energy Regulatory Commission in the summer or fall and the New York PSC in the first quarter of 2013. The PSC must determine the sale is in the public interest.

If all needed approvals are received, the acquisition will be completed early in 2013, CH Energy said.

"We are now in the process of talking to all our constituencies," he said. "We have already reached out to a number of government officials, elected officials and community leaders, and we're going to continue to do that over the next few days and weeks, explaining to all the constituencies why we think this transaction makes sense and is really good for everybody."

CH Energy touted the premium price shareholders are expected to receive in the deal, the technical expertise of Fortis and the Canadian company's compatibility with CH Energy corporate culture.

"We firmly believe this opportunity is in the best interests of our shareholders, customers and employees," CH's prepared statement said.